Sourcing

Dominion Finds Buyer for Ekati, Mine to Reopen Early 2021

SourcingDec 09, 2020

Dominion Finds Buyer for Ekati, Mine to Reopen Early 2021

The company has reached a deal to sell the diamond mine to two wealth management firms and says it plans to restart the mine no later than Jan. 29.

2020_Ekati_Diamond_Mine_aerial_view.jpg
The Ekati Diamond Mine, seen here in an aerial shot provided by Dominion Diamond, should soon have a new owner and restart operations. Ekati was Canada’s first diamond mine and has been in operation since 1998.

London—Eight months after seeking insolvency protection, Dominion Diamond Mines ULC said it has reached a deal to sell its Ekati mine to two wealth management firms.

In a news release issued Monday, Dominion announced the sale of the diamond mine to DDJ Capital Management and Brigade Capital Management LP, both investment managers to holders of the company’s second lien notes.

Funds managed by DDJ Capital Management owned Samuels Jewelers for a period in the late ‘90s to the early 2000s, while Brigade was one of the firms that floated Barneys $218 million in debtor-in-possession financing while the now-defunct department store searched for a buyer.

The two companies will acquire substantially all of Dominion’s assets in exchange for taking on $70 million in debt.

The sale does not include Dominion’s 40 percent stake in Rio Tinto’s Diavik Diamond Mine; Dominion and Rio Tinto are involved in a separate legal battle regarding their partnership in Diavik.

Once the deal is closed, Dominion said it expects the ongoing business to pay or otherwise satisfy: Dominion’s employees, including their pension obligations; governmental authorities, including the obligations to restore the land once Ekati closes for good; and Dominion’s Impact Benefit Agreement partners and other Indigenous groups and Northern communities.

The sale of the Ekati Diamond Mine is subject to closing conditions, including court approval.

The deadline for the deal to close is Feb. 1, and Dominion said it will “take all action reasonably necessary or appropriate” to restart operations at the mine no later than Jan. 29.

While most Ekati employees have been out of work since March, there has been a skeleton crew working while the mine has been on care and maintenance, and Dominion recalled 60 workers last month in anticipation of reopening.

When fully operational, Ekati employs more than 1,000 people, including 396 members of Canada’s Union of Northern Workers (UNW) Local 3050.

On Tuesday, UNW President Todd Parsons said the union was “pleased and relieved” Dominion found a buyer for the mine and that the deal includes protection for the mine’s workers and their pensions.

“As the union representing almost 400 Ekati workers, our main objective throughout this difficult time was seeing the mine succeed and reopen, both for long-term stable employment for our members and economic growth for the territory,” he said.

“This is welcome news, especially as we go into the holiday season, and we look forward

to the remainder of our laid-off members returning to work in the new year.”

The diamond mine, which is located in Canada’s Northwest Territories about 120 miles south of the Arctic Circle, has been closed since mid-March.

Dominion was granted insolvency protection the following month, citing the disruption COVID-19 caused to the global diamond market.

An earlier deal to sell Ekati to affiliates of its current owner, The Washington Companies, fell through this fall over the objections of Dominion’s insurers.
Michelle Graffis the editor-in-chief at National Jeweler, directing the publication’s coverage both online and in print.
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